Investing term

What is Free cash flow (FCF)?

Cash from operations minus capital expenditures — the cash actually available to shareholders or debt holders.

Free cash flow (FCF) is the cash a company generates from operations after subtracting the capital spending needed to maintain and grow the business. It's the cash truly available to reward shareholders — through dividends, buybacks, or debt reduction — and many investors trust it more than reported earnings, since it's far harder to manufacture.

For example

A company with $500M of operating cash flow that spends $200M on equipment has $300M of free cash flow — the real money left over for owners.

Free cash flow (FCF) is taught hands-on in Stage 14 — Reading Financial Statements.

See the lesson →

Related terms

Accounts receivable (A/R)Money customers owe the company for goods or services already delivered but not yet paid.AccrualsAccounting entries that record revenue or expense before cash actually moves.Annual reportThe yearly disclosure that includes audited financials, MD&A, and footnotes — the primary source for serious investors.Balance sheetThe 'photo' statement — what the company owns, what it owes, and what's left for owners, on a single date.
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